Gran Colombia Gold Announces First Quarter 2013 Results, Including Savings From Ongoing Cost Reduction Initiatives, And Releases High Grade Drill Results From Its Segovia Project

May 14, 2013

TORONTO, May 14, 2013 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) announced today the release of its unaudited condensed consolidated financial statements and accompanying management's discussion and analysis (MD&A) for the first quarter of 2013 and the results of its ongoing exploration at its Segovia Project. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

First Quarter 2013 Highlights

  • Total gold production of 24,350 ounces for the first quarter of 2013, a 10 percent increase over the fourth quarter of 2012, driven by a 13 percent increase at the Segovia Operations. Mill operations at the Maria Dama plant at the Segovia Operations have stabilized in 2013 with the mill averaging more than 1,000 tpd since the beginning of March. The company remains on track to produce a total of 110,000 ounces of gold in 2013.
  • Revenue of $37.6 million in the first quarter of 2013 reflected the sale of 22,289 ounces of gold at an average realized price of $1,639 per ounce and 35,069 ounces of silver at an average realized price of $30 per ounce.
  • In January 2013, management embarked on a comprehensive review of its operations to identify and implement $12 million in annualized cost savings. This program resulted in $850,000 per month of savings starting in February 2013, with approximately $700,000 directly related to operating costs at the Segovia Operations and the balance in general and administrative (G&A) spending. In May 2013, the company is implementing further actions that will reduce operating costs by an additional $500,000 per month at Segovia, bringing the annualized cost savings starting in June 2013 to $16.2 million, a 35 percent improvement compared to the company's previous target.
  • Total cash costs averaged $1,281 per ounce of gold in the first quarter of 2013, a significant improvement from $1,534 per ounce in the fourth quarter of 2012. As a result of the realized cost reductions and the improvement in gold production, Segovia's cash cost decreased to an average of $1,315 per ounce for the first quarter of 2013 and to $1,164 per ounce in the month of March.
  • All-in sustaining costs were $1,545 per ounce in the first quarter of 2013 and are expected to trend down over the balance of the year to an expected annual average for 2013 of $1,280 per ounce. The additional cost savings being implemented in May and a further improvement in Segovia's gold production, resulting from increased grades in the second half of 2013, will both have a positive impact on total cash costs and all-in sustaining costs. In addition, the decrease in gold prices since April 2013 will further reduce total cash costs and all-in sustaining costs, as approximately 56 percent of Segovia's production is sourced from artisanal mining operations, where approximately 80 percent of the production cost is directly tied to the price of gold.
  • G&A decreased to $3.6 million in the first quarter of 2013. In February 2013, the company took steps to cut spending by $150,000 per month, a significant contributor in the expected reduction in G&A from $16.5 million in 2012 to a level of $14.5 million in 2013.
  • Exploration: The company is pleased to announce significant results from the ongoing 20,000 meter exploration program at its Segovia Project, with several intercepts showing visible gold and grades of more than one ounce of gold per tonne of ore.  These drill intercepts include 0.42 meters grading 663.32 grams per tonne (g/t), 0.30 meters grading 340.84 g/t, 0.30 meters grading 172.67 g/t, 0.50 meters grading 101.36 g/t and 2.60 meters grading 42.31 g/t.  The company expects to finalize an updated NI 43-101 resource estimate for Segovia in mid-2013, following completion of the drilling campaign that commenced late last year to upgrade and expand its resources at Segovia.

"We believe that the global market fundamentals remain in place to support a strong gold market, but we have undertaken significant measures to adjust our 2013 business model to enable the company to achieve its cash generation targets in the current price environment and we will continue to identify opportunities to further reduce our costs", said Serafino Iacono, Executive Co-Chairman of Gran Colombia.  Commenting on the drill results at the company's Segovia Project he added, "We are very excited by the ongoing exploration program at Segovia as we continue to see exceptional drill results, including several intercepts with visible gold and a 0.4 metre section with grades of over 20 ounces of gold per tonne of ore."

Financial and Operating Summary

A summary of the financial and operating results for the first quarter of 2013 is as follows:

    First Quarter
  2013 2012
Operating data:
Gold produced (ounces) 24,350 26,260
Gold sold (ounces) 22,289 24,814
Average realized gold price ($/oz sold) $ 1,639 $ 1,676
Total cash costs ($/oz sold) (1) 1,281 1,199
All-in sustaining costs ($/oz sold) (2) 1,545 N/A
Financial data:     (x $1,000, except per share amounts)    
Total revenues $ 37,621 $ 42,678
Gross margin (3) 4,140 7,921
Net income attributable to shareholders 9,545 1,128
Basic and diluted income per share 0.02 0.00
Cash and cash equivalents 1,993 5,113
Cash in trust, current and non-current (4) 77,264 2,400
Total debt, including current portion 172,091 83,168

(1) "Total cash costs" are presented on a per ounce sold basis and represent consolidated averages for the company from both the Segovia Operations and Marmato Underground mine. See "Additional Financial Measures" in MD&A.
(2) For 2013, in conjunction with a non-GAAP initiative being undertaken within the gold mining industry, the company has adopted an "all-in sustaining costs" non-GAAP performance measure that the company believes more fully defines the total costs associated with producing gold; however, this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to the MD&A for a reconciliation of all-in sustaining costs.
(3) "Gross margin" represents total revenues, net of operating costs, production taxes and depreciation, depletion and amortization.
(4) 2013 includes $74.6 million set aside to pay capital costs of the Segovia expansion and interest on the Gold Notes until October 2014.

Segovia Operations Update

Gold production at the Segovia Operations was up 13 percent from the fourth quarter of 2012. With the resolution of the power disruptions that had adversely impacted the fourth quarter of 2012, the company successfully increased tonnes processed by approximately 8 percent from the previous quarter to an average of 918 tpd for the first quarter of 2013. In the month of March 2013, the daily rate averaged 1,033 tpd. Although head grades at the Segovia Operations were similar in the first quarter of 2013 to the previous quarter, gold production at the Segovia Operations also benefitted from an improvement in mill recovery to 83 percent, up from 76 percent in the previous quarter. Mine development work is continuing at the Segovia Operations and the company expects that head grades will begin to show improvement by the end of the second quarter of 2013.

The company commenced a drilling campaign of 80 holes and 20,000 metres in October 2012 to upgrade and expand the mineral resources at Segovia. With the completion of 72 holes and 18,000 metres, the program is approximately 88 percent complete.  The company expects to complete the drilling in the second quarter of 2013, which will lead to an updated NI 43-101 resource estimate for Segovia to be announced mid-year.

Significant results (greater than 6.0 g/t) are summarized below:

Drill Hole From (m) To (m) Length (m) Gold  (g/t) Silver (g/t) Vein
DS-0087 382.15 383.80 1.65 7.84 4.0 Providencia
incl. 382.15 382.80 0.65 11.37 7.8  
DS-0088 371.75 372.18 0.43 7.63 28.1 Providencia HW
DS-0089 27.50 27.93 0.43 7.50 11.9 Granodiorite
DS-0089 453.54 454.26 0.72 396.07 270.8 Providencia
incl. 453.54 453.96 0.42 663.32 424.3  
and 453.96 454.26 0.30 21.92 55.9  
DS-0089 455.00 456.57 1.57 40.16 22.0 Providencia FW 1
incl. 455.00 455.30 0.30 172.67 89.4  
and 455.30 456.00 0.70 11.90 6.9  
DS-0089 464.00 464.40 0.40 6.45 3.9 Providencia FW 2
DS-0092A 110.42 110.80 0.38 16.21 11.8 Marmajito HW
DS-0093 174.10 174.65 0.55 7.54 14.2 Sandra K Piso
DS-0093 222.85 223.15 0.30 8.84 7.8 Sandra K Piso FW1
DS-0096 174.72 175.15 0.43 9.06 39.7 Sandra K Techo
DS-0097 366.00 366.50 0.50 8.69 9.9 Providencia
DS-0100 130.46 131.06 0.60 43.79 39.1 Sandra K Techo
DS-0101 71.70 72.20 0.50 15.93 12.4 Silencio Sur 1
DS-0102 210.06 210.54 0.48 12.31 13.4 Chumeca
DS-0103 125.52 125.95 0.43 13.65 21.1 Sandra K Techo
DS-0106 389.00 389.44 0.44 6.37 5.8 Providencia?
DS-0107 131.47 131.80 0.33 59.07 124.9 Sandra K Techo
DS-0113 195.65 196.22 0.57 18.69 16.6 Chumeca
DS-0118 179.37 179.92 0.55 6.25 16.4 Sandra K Techo
DS-0122 89.35 89.80 0.45 10.01 14.7 El Silencio 1?
DS-0126 484.70 487.30 2.60 42.31 24.2 Providencia
incl. 484.70 485.05 0.35 60.86 36.0  
and 485.05 486.05 1.00 44.05 22.5  
and 486.05 487.30 1.25 35.72 22.2  
DS-0126 490.12 491.00 0.88 10.84 6.9 Providencia
DS-0126 493.10 493.60 0.50 9.38 12.3 Providencia FW1
DS-0129A 142.28 142.67 0.39 8.48 8.2 Poma Rosa HW1
DS-0130 201.70 202.00 0.30 340.84 459.9 Sandra K Techo
DS-0132 58.40 58.98 0.58 6.11 41.5 Las Aves
DS-0134 203.56 203.95 0.39 7.23 9.7 Sandra K Techo
DS-0139 235.32 235.72 0.40 15.00 12.1 Sandra K Techo
DS-0139 250.70 251.30 0.60 9.38 30.5  
DS-0141 238.20 238.70 0.50 101.36 236.7 Sandra K Techo
DS-0145 252.37 253.21 0.84 16.37 60.2 Sandra K Techo
incl. 252.90 253.21 0.31 30.67 31.3 Sandra K Techo
DS-0146 123.12 123.42 0.30 19.78 25.2 Carla
DS-0148 193.98 194.75 0.77 32.22 33.9 Sandra K Techo
incl. 193.98 194.29 0.31 56.10 47.5  
and 194.29 194.75 0.46 16.13 24.8  

* Sample grades over 6.0 g/t Au reported. Grades are for single samples and for length-weighted composites calculated with a cutoff grade of 5.0 g/t Au and no internal dilution. The length is the down-hole sample or composite length and is not necessarily the true width of the vein. The true widths are estimated to be between 50% and 100% of the down-hole length. The grades are not cut and the intervals are not diluted to a minimum mining width. Abbreviations: FW = foot wall vein, HW = hanging wall vein.

Marmato Project

At Marmato Underground, operations remained steady in the first quarter of 2013, with 679 tpd milled at an average head grade of 3.0 g/t and a mill recovery of 88.9%, resulting in gold production of 5,298 ounces for the first quarter. Gold production is expected to be 20,000 ounces in 2013, down from 21,717 ounces produced last year, due to the impact on production of a crusher upgrade to be completed in the second quarter of 2013.

The company's near-term focus at the Marmato Project is to complete and publish the prefeasibility study for the modernization and expansion of its current underground operation.  The company is making progress with Roscoe Postle and Associates and other technical consultants and expects to be in a position to publish the underground prefeasibility study and a supporting NI 43-101 mid-year 2013.


The company is focused on cost reductions and limiting capital investments to support an expected production level of 110,000 ounces of gold in 2013.  The company continues to expect production at its Segovia Operations to reach 90,000 ounces of gold in 2013 and production from the underground mine at Marmato to total 20,000 ounces of gold.  To-date, management has identified and implemented $16 million in annualized cost savings, a 35 percent improvement over its initial target set at the beginning of the year and necessitated by the recent decline in gold prices to maintain the company's expected cash generation from operations in 2013.

In 2013, the company has adopted an "all-in sustaining cost" measure that it believes more fully defines the total costs associated with producing gold.  All-in sustaining costs include cash costs (on a by-product credit basis), G&A, sustaining capital, and exploration and evaluation costs. As the measure seeks to reflect the full cost of gold production from current operations, new project capital is not included in the calculation.  For 2013, in light of the current gold price environment and the incremental cost savings identified and effective in June, the company has revised its all-in sustaining cost guidance for the year to $1,280 per ounce, an improvement from the previously communicated target of $1,380 per ounce. This new target, based on the first quarter actual results and current gold prices, includes total cash cost of approximately $1,070 per ounce, G&A of $130 per ounce, sustaining capital of $40 per ounce and exploration and evaluation costs of $40 per ounce. Total cash cost guidance for the year has been reduced from $1,170 per ounce to approximately $1,070 per ounce reflecting the incremental cost savings being implemented effective June 2013 and the impact of lower gold prices on the artisanal mining operations' costs at Segovia and production taxes, both of which are tied to spot gold prices, and therefore, provide a natural hedge to gold price movement.

Guidance for sustaining capital expenditures for 2013 remains at approximately $4.5 million. These expenditures will be funded internally from unrestricted cash balances and operating cash flow and will focus on sustaining capital at the two operating mines, including the completion of Maria Dama mill upgrades, the environmental program at Segovia and a crusher upgrade at the Marmato underground mining operation. An additional $4.5 million is expected to be spent on various ongoing activities at the Marmato Project site.

Capital expenditures, exploration and mine development in support of the expansion of the Segovia Operations (also referred to as the "Pampa Verde Project") are being funded separately from the proceeds of the Gold Notes and are not included in all-in sustaining cash cost.


As a reminder, the company will host a conference call and webcast on Wednesday, May 15th at 9:30 a.m. Eastern Time (8:30 a.m. Bogota time) to discuss the results and provide an operational update.

Webcast and call-in details are as follows:

Live Event link:
Toronto & International:  1 (847) 585-4405
North America Toll Free:  1 (888) 771-4371
Colombia Toll Free:   01 800 9 156 924
Conference ID:   34844128

A replay of the webcast will be available at from May 15, 2013 until June 30, 2013.

Qualified Person

Stewart D. Redwood, Senior Consulting Geologist to the Company, is a qualified person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects and prepared or reviewed the preparation of the scientific and technical information in this press release in respect of the drilling results from the Segovia Project.  Dr. Redwood verified the data disclosed in this news release, including the sampling, analytical and test data underlying the information contained in this news release.  Verification included a review of the quality assurance and quality control samples, and review of the applicable assay databases and assay certificates.

Quality Assurance and Quality Control

In the case of the drilling results referred to herein, the samples were prepared by SGS Colombia S.A. at their sample preparation facility in Medellin, Colombia, and were assayed by SGS del Perú S.A.C. at their laboratory in El Callao, Peru.  Both of these companies are part of the SGS group (ISO 9001:2008 certified). Gold was assayed by fire assay with atomic absorption spectrophotometer (AAS) finish.  Samples over 5 g/t gold were re-assayed by fire assay with gravimetric finish.  Silver was analyzed by multiacid digestion with AAS finish, or by aqua regia digestion and inductively coupled plasma emission spectrophotometer (ICP-ES) finish.  Blank, standard and duplicate samples were routinely inserted for quality assurance and quality control.

About Gran Colombia Gold

Gran Colombia is a Canadian-based gold and silver exploration, development and production company with its primary focus in Colombia. Gran Colombia is currently the largest underground gold and silver producer in Colombia with several underground mines in operation at its Segovia and Marmato Operations. In addition, Gran Colombia is advancing a project to develop a large-scale, gold and silver mine at its Marmato operations.

Additional information on Gran Colombia Gold can be found on the company's website at and by reviewing the company's page on SEDAR at

This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects and, specifically, statements concerning anticipated growth in annual gold production and reduction of cash costs. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gran Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's Annual Information Form dated as of March 26, 2013 which is available for view on SEDAR at Forward-looking statements contained herein are made as of the date of this press release and Gran Colombia disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.



Roy MacDonald
Investor Relations
(416) 360-4653


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